Health costs to rise 10 percent

Milwaukee-area employers’ average health plan renewal rates in 2011 will increase 8 to 10 percent and more than a quarter of local employers say they will experience rate increases of at least 15 percent next year, according to the 2011 Greater Milwaukee Employer Health Care Benefits Survey.

Federal health care reform is being blamed by many for the increase, with 64 percent of employers saying the changes will add at least 2 percentage points to their 2011 renewal rates. Half of these employers say the elimination of lifetime caps, the addition of free preventive care and mandated coverage for children up to age 26 will add between 2 and 4 percentage points.

About 140 employers representing an estimated 90,000 employees participated in the online survey in September, from HCTrends, a Milwaukee health care data tracking firm. The survey was conducted with The Benefit Services Group, the Business Health Care Group, the Metropolitan Milwaukee Association of Commerce and the Wellness Council of Wisconsin. Employers’ health care plan costs increased an average of 11 to 13 percent in 2010, up from the average 8 to 10 percent increase reported in 2009, according to HCTrends.

“We’ve done a good job of moderating the increase in health care costs, but to a certain extent, that has escaped a lot of small or mid-sized employers.” said Tim Sheehy, MMAC president. “A double-digit increase in any cost is extremely challenging to deal with.”

Small employers, with 20 to 99 employees, face the largest increases with 45 percent reporting renewal rates of at least 15 percent, while only 9 percent of large employers expect their health plan costs to increase that much.

Because of that, 40 percent of small employers say they are “seriously considering” changing networks or health plans, up from 30 percent of respondents who said they were considering changing plans last year.

Employers said they are considering several other cost-containment strategies in 2011, including increasing deductibles, co-pays and co-insurance and increasing out-of-pocket maximums, both ideas that more than 50 percent supported.

Ten percent of employers said they plan to reduce the amount of money they allocate for employee health savings accounts or health reimbursement arrangements.

Other survey results show that 27 percent of employers with fewer than 20 workers and 18 percent of employers with 20 to 99 workers say it is “likely” or “very likely” they will terminate their health plan and let workers get insurance through government-run insurance exchanges.

Jon Rauser, president of The Rauser Agency, an independent Milwaukee broker that specializes in the small group market, questioned the accuracy of the report.

“I don’t think the business owners know anymore than what we read in the paper,” Rauser said.

Health plan rate renewals are being delivered and should be known later this month, Rauser said.